U.K. Economy Regains Pre-Recession Peak, Niesr SaysFergal O’Brien
Britain’s strengthening recovery has probably pushed the economy back above its pre-crisis level, ending the longest period of below-peak output in a century.
The National Institute of Economic and Social Research estimates gross domestic product rose 0.9 percent in the three months through May. That puts it about 0.2 percent above where it was in January 2008, Niesr said in a monthly report today.
Britain is the last of the Group of Seven nations bar Italy to regain its pre-recession level. The development may add to the debate among Bank of England officials about when to raise interest rates from a record low as they begin to diverge on the timing of policy tightening.
Niesr published its estimate after data today showed U.K. industrial production rose for a third month in April, driving the annual increase to 3 percent, the most since 2011.
The gain would have been even bigger were it not for a sharp drop in electricity and gas output, which was down 11.5 percent from a year earlier. That was partly related to warmer weather this year and knocked about 1 percentage point off industrial production.
Today’s data also showed manufacturing rose 0.4 percent in April from March. That was a fifth consecutive increase, the longest streak of gains since 2010.
“This is a solid start to the second quarter,” said David Tinsley, an economist at BNP Paribas SA in London. “If manufacturing production went sideways in May and June it would still be up 1.1 percent over the quarter. And all survey evidence suggests a better performance than that is possible.”
In the three months through April, production rose 1.1 percent compared with the previous three months. That was the most since June 2010 and marked a 15th consecutive advance. While the economy has strengthened over the past year, industrial output remains 11.3 percent below where it was in the first quarter of 2008, while manufacturing is 7 percent smaller.
The U.K. Treasury said the data are “further evidence that the government’s long-term economic plan is working.”
“The job is not done, but the greatest risk to the recovery would be abandoning the plan that’s delivering a brighter economic future for Britain,” it said in a statement.